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Gas Lift A Service Company Perspective

Gas Lift A Service Company Perspective. Gas Lift Workshop February 2003 Brian A. Matusek. Canada 48,200. FSU 115,000. North Sea 600. Germany 1,000. China 77,000. US 500,000. Egypt 1,100. Oman 2,300. Indonesia 9,500. Venezuela 14,200. India 3,000. Nigeria 300. Peru 4,500.

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Gas Lift A Service Company Perspective

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  1. Gas LiftA Service Company Perspective Gas Lift Workshop February 2003 Brian A. Matusek

  2. Canada 48,200 FSU 115,000 North Sea 600 Germany 1,000 China 77,000 US 500,000 Egypt 1,100 Oman 2,300 Indonesia 9,500 Venezuela 14,200 India 3,000 Nigeria 300 Peru 4,500 Brazil 6,300 Australia 1,100 Argentina13,500 World: 830,000 wells Artificial Lift Market Info and Well Distribution

  3. Artificial Lift Industry has grown by more than $500 million in the last 12 years Artificial Lift Market Evolution * Excludes Russia and China.

  4. Inland Bay & Offshore (Shelf) Land Offshore (Deep Water/ Sub Sea) Gas Lift – Areas of Opportunity & Encroachment Land Gas Lift Applications • Growth Opportunity - De-Watering Gas Wells with Gas Lift • Encroachment - Electric submersible pumps; some PCP applications due to drawdown • Inland Bay & Offshore Gas Lift Applications • Opportunity – Competitive due to infrastructure limitations, available natural gas; alternative uses? • Encroachment – Electric Submersible Pumps and other lift methods as reliability improves • Offshore Deep Water/Sub Sea Gas Lift Applications • Still undefined, although systemic issues currently limit application depth

  5. Largest Oil-Producing Companies, mb/d

  6. Fracturing Completions 4% 5% Subsea 11% Seismic 46% Drilling 8% Technology 26% Horizontal Drilling Contribution to Falling E&P Costs 1995 to 1997 Source: Salomon Smith Barney

  7. R&D Spending 1990 to 2001

  8. Return on Capital Employed - Oil Service Companies WACC = 12.2% Source: Simmons & Co.

  9. Risk Size of Effort Time Product Development Processand Risk Reduction

  10. So what is taking Schlumberger so long to introduce new Gas Lift Products? • SLB Systematic approach to the Product Development • Technical Audit of Gas Lift Product Line mandated the “re-engineering” of several product lines to accommodate the incorporation into the SLB Engineering Database and Manufacturing Process • Over the past two years, SLB has invested a significant amount of its annual Gas Lift Revenue on the Sustaining and Re-Engineering of the Product Line • New Product Development project commenced in 2002

  11. Business Issues affecting new Gas Lift R&D Decisions • In the end, it is a Risk vs. Reward Proposition • Commercial Risk Factors • Early Market acceptance of technology • Viable Business Model - Market pricing and volume which allows for reasonable return on the R&D Investment • Technical Risk Factors • Will it work! – that is, does it fulfill the product requirement s • Can we build it for the original estimate? • Other Influencing Factors • Marketshare Impact of new technology • Leverage across Schlumberger is an advantage • Strategic Initiatives can assist in project funding • Track Record

  12. Potential Gas Lift R&E Focus Areas • Energy Optimization through engineering improvements • Expanding the range of Gas Lift Deployment • Continuous Gas Lift Optimization • Systemic Improvement efforts with surface equipment providers such as control valve companies and compression companies • Reliability

  13. Concluding Remarks

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